标题: Repo rate and collateral [打印本页] 作者: Iginla2010 时间: 2011-7-11 19:44 标题: Repo rate and collateral
From exam 2, book 2, p.m session question number 13.5
"The Repo strategies interest cost could be reduced by using hot collateral such as on-the-run U.S. Treasuries"
According to Schweser this statement is true.
Cirriculum states that certain lenders will lower the repo rate if availability of collateral is limited. When they say "hot collateral", it sounds like the collateral would be in high demand. On-The-Run U.S treasures are one of the most liquid fixed income instruments out there, how by any means would these be considered limited availability?
Edited 1 time(s). Last edit at Wednesday, May 25, 2011 at 11:46PM by dtrynoski.作者: Windjammer 时间: 2011-7-11 19:44
This is where the CFA disconnects with the real world. If they say Greek bonds are hot collateral, you best believe your repo rate will be lower.
NO EXCUSES作者: dyga 时间: 2011-7-11 19:44
bpdulog Wrote:
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> This is where the CFA disconnects with the real
> world. If they say Greek bonds are hot collateral,
> you best believe your repo rate will be lower.
On a side note, is this something that you are seeing the market. given the issues in Greece I doubt many investors consider Greek bonds as "hot collateral"
